Even before the outbreak of hostilities, Luna, with Gen. Jose Alejandrino, had proposed the strengthening of Kalookan against the foreseeable American attack. Apparently, although approved by Malolos, there was neither time nor available resources to implement the proposal. Now Luna realized that recovery of Kalookan was of urgent necessity, not only to protect Malolos but also, using Kalookan as a spring board, to drive the Americans out of Manila before their reinforcements could arrive. With the nation's capital under control, the Filipinos could fight from a position of strength until American public opinion, which was even then divided on the issue of empire, could turn against colonization of the Philippines and compel withdrawal of American troops from the Islands.
The project was audacious but not foolhardy, Luna had the element of surprise on his side, as the Americans had such low regard for the rebel army's striking capability that they must have considered a Filipino offensive out of the question.
The overall plan called for simultaneous attacks on Manila from three directions. The forces under Gen. Licerio Geronimo was to strike from the East, Generals Pio del Pilar and Miguel Malvar would come from the South, and from the North, Gen. Luna's brigades would retake Kalookan and proceed to Manila, eventually to establish contact with the rest of the Filipino forces inside the city. The Sandatahans (armed guerrillas) already in Manila disguised as harmless civilians would set fire to the nipa huts of Tondo and Binondo as a pre-arranged signal for the concerted attack.
Mabini indorsed the plan, Aguinaldo stamped his approval and the stage was set for the counter-offensive.
In the morning of February 21, fires broke out in Tondo, Binondo and Santa Cruz in Manila. While the 13th Minnesota Volunteers fought the flames, the Sandatahans compounded the confusion by sneak attacks, hitting the Americans guerilla style and then losing themselves among the civilian crowds.
The enemy's attention having thus been diverted, the troops of Col. Francisco Roman, creating as much noise as possible through patriotic chanting, entered Tondo by way of Bitas. The Americans in Pritil scampered for cover. Luna's surprise tactics were worlkng as expected.
The signal to attack Kalookan came in the early dawn of February 23. Cannons were fired at the American forces in town. Luna's advance units headed for the railroad yards, engaging the startled enemy in furious hand-to-hand combat. With his staff, Luna set up an observation post in the house of British railway official Higgins, where he watched his troops rout the disorganized enemy.[The house of Higgins is one of the old buildings in what is now the A. Bonifacio Elementary School compound in Sangandaan. Old torrens titles of nearby properties show that E. Jacinto Street, intersecting Torres Bugallon, used to be known as Higgins Street.]
The initial success of the counter offensive merited an extra issue of the El Heraldo Filipino in the afternoon of February 23, 1899, which reported that
"The Filipino Army occupies the suburbs of Manila.
"The American troops now in Kalookan and La Loma to the number of over six thousand are besieged by the columns commanded by Generals Luna, Llanera and Garcia.
"This very moment the special train carrying the Honorable President has left for Kalookan.
"Viva the Independent Philippines!!!"
"Viva the Unconquerable Philippine army!!"
The enthusiasm of the Heraldo, however, turned out to be premature. The Americans, regaining composure, made effective use of Dewey's guns in Manila Bay. The fire power that made mincemeat of Montojo's entire navy now rained shells on Kalookan, and McArthur sent in fresh troops to hold the railroad town.
Realizing that his men were too exhausted to dislodge the artillery-supported enemy, Luna called on the Kawit Brigade, then stationed at La Loma, to relieve his troops. Captain Pedro Janolino, declaring that he was instructed to take orders only from Againaldo, refused to fight.
The counter-offensive collapsed. His ammunition gone, his troops dead-tired from a whole day of fighting, Luna was left with no alternative but to fall back to Polo.
The gate to Malolos had been breached. With his reinforcements steadily arriving, McArthur pursued Aguinaldo to the capital of the Republic, then through Tarlac and Tirad Pass, until the final curtain at Palanan.
After the loss of Kalookan, the fall of the Republic became only a matter of time.